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ETSY's Q1 Earnings Miss Estimates, Revenues Increase Y/Y
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Etsy, Inc. (ETSY - Free Report) reported first-quarter 2024 earnings of 48 cents per share, missing the Zacks Consensus Estimate by 2.04%. The bottom-line figure reflects a year-over-year decrease of 9.4%.
Revenues advanced 0.8% year over year to $645.95 million. The figure missed the Zacks Consensus Estimate by 0.4%.
Top-line growth was driven by accelerating services revenues.
Strong momentum across active sellers and reactivated buyers remained positive.
Marketplace revenues were $466.98 million (72.3% of the total revenues), down 0.1% from the year-ago quarter’s level. Nevertheless, ETSY acquired 5.7 million new buyers, which was a major positive. The total number of active buyers on Etsy’s marketplace stood at 91.6 million, which increased 1.9% year over year.
Services revenues were $178.97 million (27.7% of the total revenues), up 3.2% on a year-over-year basis. Etsy ads acted as a key driver of revenue growth.
Quarterly Specifics
Etsy’s active buyer base increased 0.9% from the prior-year quarter’s figure to 96.4 million, which missed the consensus mark of 96.6 million.
The active seller base stood at 9.13 million, up 15% year over year. The figure missed the consensus mark of 9.3 million. Increasing investments to support sellers with new tools and insights, such as a ‘Growth Page’ with customer insights to help sellers grow their businesses and a new ‘earnings calculator’ to assist sellers in understanding various inputs that go into their profitability, had a positive effect on seller base growth.
ETSY witnessed solid momentum in buyer reactivation. Reactivated buyers were 6.3 million, up 5.9% year over year.
Gross merchandise sales (GMS) of $3 billion were down 3.7% on a reported basis and 4.1% on a currency-neutral basis from the prior-year quarter. The reported figure lagged the Zacks Consensus Estimate of $3.05 billion.
The Etsy marketplace’s GMS was $2.6 billion, down 5.3% on a reported basis from the year-ago quarter’s figure.
Operating Details
In first-quarter 2024, the gross margin was 71%, which expanded 150 basis points year over year.
Total operating expenses were $390.73 million, up 6.4% from the prior-year quarter. As a percentage of revenues, the figure expanded to 60.5% from 57.3% in the year-ago quarter.
Consequently, ETSY reported an operating income of $68.1 million compared with an operating income of $78.2 million reported in the prior-year quarter.
Balance Sheet & Cash Flows
As of Mar 31, 2024, cash and cash equivalents totaled $788.84 million, which decreased from $914.32 million as of Dec 31, 2023.
Short-term investments were $254.88 million, up from $236.12 million in the previous quarter.
Long-term debt stood at $2.28 billion at the end of the first quarter, which remained flat compared with the figure at the end of the prior quarter.
In first-quarter 2024, the company generated $69.03 million in cash from operations, down from $295.1 million in the previous quarter.
Guidance
For second-quarter 2024, Etsy anticipates the take rate to be similar to the actual Q1’24 figure of 21.6%.
GMS is expected to decline, with the downside being a mid-single-digit decline and the upside being the top end of a low-single-digit decline
The adjusted EBITDA margin is expected to be similar to the reported Q1’24 figure of 26%.
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ETSY's Q1 Earnings Miss Estimates, Revenues Increase Y/Y
Etsy, Inc. (ETSY - Free Report) reported first-quarter 2024 earnings of 48 cents per share, missing the Zacks Consensus Estimate by 2.04%. The bottom-line figure reflects a year-over-year decrease of 9.4%.
Revenues advanced 0.8% year over year to $645.95 million. The figure missed the Zacks Consensus Estimate by 0.4%.
Top-line growth was driven by accelerating services revenues.
Strong momentum across active sellers and reactivated buyers remained positive.
Etsy, Inc. Price, Consensus and EPS Surprise
Etsy, Inc. price-consensus-eps-surprise-chart | Etsy, Inc. Quote
Top Line in Detail
Marketplace revenues were $466.98 million (72.3% of the total revenues), down 0.1% from the year-ago quarter’s level. Nevertheless, ETSY acquired 5.7 million new buyers, which was a major positive. The total number of active buyers on Etsy’s marketplace stood at 91.6 million, which increased 1.9% year over year.
Services revenues were $178.97 million (27.7% of the total revenues), up 3.2% on a year-over-year basis. Etsy ads acted as a key driver of revenue growth.
Quarterly Specifics
Etsy’s active buyer base increased 0.9% from the prior-year quarter’s figure to 96.4 million, which missed the consensus mark of 96.6 million.
The active seller base stood at 9.13 million, up 15% year over year. The figure missed the consensus mark of 9.3 million. Increasing investments to support sellers with new tools and insights, such as a ‘Growth Page’ with customer insights to help sellers grow their businesses and a new ‘earnings calculator’ to assist sellers in understanding various inputs that go into their profitability, had a positive effect on seller base growth.
ETSY witnessed solid momentum in buyer reactivation. Reactivated buyers were 6.3 million, up 5.9% year over year.
Gross merchandise sales (GMS) of $3 billion were down 3.7% on a reported basis and 4.1% on a currency-neutral basis from the prior-year quarter. The reported figure lagged the Zacks Consensus Estimate of $3.05 billion.
The Etsy marketplace’s GMS was $2.6 billion, down 5.3% on a reported basis from the year-ago quarter’s figure.
Operating Details
In first-quarter 2024, the gross margin was 71%, which expanded 150 basis points year over year.
Total operating expenses were $390.73 million, up 6.4% from the prior-year quarter. As a percentage of revenues, the figure expanded to 60.5% from 57.3% in the year-ago quarter.
Consequently, ETSY reported an operating income of $68.1 million compared with an operating income of $78.2 million reported in the prior-year quarter.
Balance Sheet & Cash Flows
As of Mar 31, 2024, cash and cash equivalents totaled $788.84 million, which decreased from $914.32 million as of Dec 31, 2023.
Short-term investments were $254.88 million, up from $236.12 million in the previous quarter.
Long-term debt stood at $2.28 billion at the end of the first quarter, which remained flat compared with the figure at the end of the prior quarter.
In first-quarter 2024, the company generated $69.03 million in cash from operations, down from $295.1 million in the previous quarter.
Guidance
For second-quarter 2024, Etsy anticipates the take rate to be similar to the actual Q1’24 figure of 21.6%.
GMS is expected to decline, with the downside being a mid-single-digit decline and the upside being the top end of a low-single-digit decline
The adjusted EBITDA margin is expected to be similar to the reported Q1’24 figure of 26%.
Zacks Rank & Stocks to Consider
Etsy currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Arista Networks (ANET - Free Report) , Alphabet (GOOGL - Free Report) and Badger Meter (BMI - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Arista Networks have gained 8.9% in the year-to-date period. The long-term earnings growth rate for ANET is 17.48%.
Shares of Alphabet have gained 16.5% in the year-to-date period. The long-term earnings growth rate for GOOGL is currently projected at 17.21%.
Shares of Badger Meter have gained 18.7% in the year-to-date period. The long-term earnings growth rate for BMI is 15.57%.